As Georgia leaders work to expand financial inclusion and community wealth, employee ownership is emerging as one of the most powerful, and underutilized, strategies to get there. Whether through Employee Stock Ownership Plans (ESOPs), worker cooperatives, or Employee Ownership Trusts, giving workers a stake in the businesses where they work has proven to build wealth, retain jobs, and anchor businesses in their communities. In a state where nearly half of all business owners are nearing retirement, these models also offer timely solutions to preserve small businesses and prevent wealth loss.
By chance, two national thought leaders, Transform Finance and the Lafayette Square Institute, each released new reports (The Trillion Dollar Opportunity Hiding in Plain Sight: Why Investors Are Paying Attention to Employee Ownership and Financing the Growth of Employee Ownership: Policy Landscape Report) which make the case for employee ownership as a driver of inclusive prosperity, quantify the scale of the opportunity, identify barriers in the current financial system, and recommend policies and capital strategies to accelerate adoption.
Don’t have time to dig into these pieces right now? Check out our key takeaways and how they relate to Georgia’s context!
The Trillion-Dollar Opportunity
Transform Finance’s briefing estimates that roughly 1.2 million U.S. businesses employing 58 million people could transition to broad-based employee ownership. That equates to an external financing opportunity of approximately $1 trillion—with the potential to generate over $3 trillion in wealth for workers over a generation, or about $270,000 per worker. Yet the current ecosystem of dedicated capital sits in the low single-digit billions—indicating a significant shortfall.
Zooming in on Georgia, more than 78,000 Georgia firms are owned by individuals aged 55 or older, representing a major “silver tsunami” of business transitions. Without succession plans, many of these companies risk shutting down or being sold to absentee or extractive buyers. Targeted employee ownership transitions—via ESOPs, worker cooperatives, or Employee Ownership Trusts—could preserve local jobs, stabilize communities, and generate wealth for Georgia workers.
The Persistent Financing Gap & Deal Complexity
While the benefits of employee ownership are clear, both reports highlight why these transitions often stall:
Both Transform Finance and LSI argue that blended finance—integrating public de-risking capital, below-market mission debt, and transaction cost grants—can reduce these barriers. For example, LSI documents cases where foundations cover 100% of transaction advisory costs, CDFIs fill senior debt roles, and specialized mezzanine providers cover the seller note, effectively eliminating the need for personal guarantees and lowering the overall cost of capital. Let’s take a deep dive into “blended finance” models.
Typical capital stack for ESOP deals:
- Senior debt (50–70%): Provided by banks, CDFIs, or public lenders, often at 4–7% interest over 7–10 years. SSBCI-backed loans may offer slight rate reductions and more flexible collateral requirements.
- Subordinated seller debt (20–40%): Carried by the selling shareholders at 6–8% interest, typically amortized over 5–10 years.
- Equity or patient capital (5–15%): Supplied by evergreen funds, mission-driven investors, or retained earnings. Reports show that investments from funds with 8–10 year horizons often take a 10–15% equity stake or provide low-interest subordinated loans to bridge this gap.
In Georgia, promising prototypes are emerging:
- The Georgia Department of Community Affairs’ SSBCI Program partners with CDFIs, private debt funds, and financial institutions like Invest Atlanta and Truist Direct Lending to provide senior debt with up to 90% LTV coverage and flexible covenants in underserved markets.
- Kindred Futures (formerly Atlanta Wealth Building Initiative) is a nonprofit coalition focused on Black community wealth. Kindred’s strategy is to “invest in Black wealth-building solution providers,” working “in partnership with mission-aligned entities” to design equitable economic strategies. Through its “financial” pillar, Kindred Futures aims to “bolster capacity of Black wealth solution providers and leverage investments for capital movers to scale solutions.” In practical terms, Kindred mobilizes grants and impact investments into Black-led enterprises and community projects, effectively serving as a catalytic capital connector.